Immucor Beats Ests, Stays a Buy

Immucor Beats Ests, Stays a Buy
Tuesday October 14, 12:49 pm ET By Tom Park

Immucor, Inc. (NasdaqGS: BLUD - News) makes automated systems and reagents used in the testing of human blood prior to transfusion. The Norcross, Georgia-based company reported first-quarter earnings that beat our estimate by $0.05 on sales that also exceeded our forecast. The additional worldwide placements of Galileo continue to help drive Immucor's growth.
The acquisition of BioArray Solutions is expected to be significantly dilutive over the next several years. Management revised its fiscal 2009 guidance. However, although initially under pressure after placing instruments, gross margins are expected to regain momentum from the eventual growth in reagent sales, manufacturing efficiencies, and price increases. The acquisition is expected to transform Immucor into a leader in molecular diagnostic systems for blood transfusions. We rate the stock a Buy.
At its current price of $23.93 per share, BLUD is trading at roughly 25x our fiscal 2009 earnings estimate of $0.95 per share, which is at a premium to the group multiple of roughly 22x. Although continuing to grow, revenue may fall below expectations due to lower than anticipated sales from the customer loyalty program and Europe. We believe the stock is appropriately valued at roughly 33x fiscal 2009 EPS estimate. Our target price moves to $31.